During this event, Rohit Ticku, Research Fellow at the Robert Schuman Centre, will analyse the relationship between government demand for goods and services and firm performance in Uganda. Using detailed administrative data, his research shows that firms that sell to the government experience increases in total sales and sales per employee, but not in value added per worker. Sales to non-government buyers decline significantly.
This finding is substantiated in an event study that accounts for the potential self-selection of firms into sales to government entities and heterogeneity in the timing of selection into public procurement. The reallocation effect is persistent and unique, as it is not observed following sales to large private-sector buyers.
In addition, he will showcase a survey of firms involved in public procurement suggesting that the government being an attractive buyer is the most plausible explanation for the reallocation away from the private sector firms.